#BitcoinBreakdown: Five Easy Pieces

First Appearing on HedgeAccordingly

Fourth Part of a series. Part 1, Part 2, Part 3

By @sellputs

Isn’t Christmastime just wonderful, so much time with family, really, just… so… much time. With family.

If you caught the irony in that statement, you, too, need a distraction, an excuse to detach from the conversation and take a little “me” time. So take a few minutes to read this, our fourth column on bitcoin and all that it has unleashed. Your relatives will appreciate that you did.

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Gold, the precious metal found in dental work, beautiful jewelry and Fort Knox, has been a “store of value” for five thousand years.  Invented by nature or God (take your pick), it is able to survive global economic meltdowns and even nuclear meltdowns.  It has been said that if you accumulated, in one place, all the gold mined since humankind started doing it, you’d have enough to fill only three or four Olympic-sized swimming pools. 

An ounce of gold currently trades at $1,280 or so.

Now compare that to bitcoin: extant less than a decade, invented by unknown creators in 2009, said to be in a finite supply of only 21 million coins, and weightless, invisible, untraceable.  It started the year 2017 priced near $1,000 and just bumped up against the $20,000 mark before settling down near $15,000, with millions of people trying to get in on the Bitcoin Bubble.

So, what holds up the price of bitcoin?  Not GDP growth or earnings at any particular company; not the price of gold. The main thing keeping bitcoin prices aloft is little more than speculative frenzy and the virally spreading desire to own a piece of this newfangled invention.  This is emotional, and it is important to force the emotional to bow to the rational.

Here are five easy pieces of advice for investing in bitcoin and its lesser brethren:

1. Bet only money you are willing to lose. When you buy a stock, usually the chances are almost zero… that the price will fall to zero.  Buying crypto-coins is more like trading in puts and calls on the CBOE, options that have a definite expiration date and which often end up worthless.  So invest only what you are willing to lose at this roulette wheel. 


2. It is utterly insane to borrow money from elsewhere to invest in bitcoin or any other cryptocurrency, whether the borrowing is from a new low-interest credit card or from a second mortgage on your home. Be smarter than that.


3. It may be safer to buy bitcoin and skip the imitators. In the long run, anyway. In this realm, the Shakespearean axiom that a rose-is-a-rose-is-a-rose seems untrue to us—there’s bitcoin, and then there’s everyone else.  We would advise betting more on bitcoin.  Other currencies such as Litecoin (LTC) and Ripple (XRP) may rise higher in percentage terms when they do rise, given bitcoin’s extraordinary climb, yet bitcoin’s price may fall less that that of its knockoffs.


4. Even bitcoin may be only a short-term play. Some “investors” may ponder putting up $20,000 for one bitcoin, locking it away in some Coinbase-like account (“cold storage”) and returning ten years from now to unearth a coin worth $20 million.  One-thousand-fold returns have happened for the earliest bitcoin buyers. Now, however, the Law of Large Numbers makes a thousand-fold rise from these levels much more difficult.  So if you do make a wager, watch it closely and constantly, and be ready to bail.


5. If you invest, consider the “halfsies” rule. I know, it’s pussy, right?  (As in “pusillanimous,” gutless, timid.)  Yet it is a way to avoid Bitcoin Bubble Bankruptcy!  So if you put up, say, $10,000 in a bitcoin account, and the price doubles from where you started, sell half your stake to recover your original bet, and let the other half ride.  This way your principal will be preserved, yet you retain a stake in the next round of upside.

Remember, my friends, the way to get rich is focused more on preserving and protecting what you have earned than on finding the next windfall.  Good luck.

Next: The new face of bitcoin investors. Gardener, a Burner and a Big Guy.

Is This Why Charlie Lee Sold His Litecoin?

Authored by Tom Luongo,

The news broke yesterday morning that Litecoin developer and outspoken founder, Charlie Lee, sold or donated all of his liquid Litecoin holdings.  This prompted a big sell-off in the cryptocurrency markets, putting on pause the bounce off of the previous night’s bottom below $16000 for Bitcoin.

This comes in the wake of Coinbase adding Bitcoin Cash (BCH) to its stable of coins available for purchase, which also sent shockwaves through the markets.

In his post on reddit, Lee explained that he felt his ownership stake was actually a burden on Litecoin’s development as a real-world medium of exchange:

And whenever I tweet about Litecoin price or even just good or bads news, I get accused of doing it for personal benefit. Some people even think I short LTC! So in a sense, it is conflict of interest for me to hold LTC and tweet about it because I have so much influence. I have always refrained from buying/selling LTC before or after my major tweets, but this is something only I know. And there will always be a doubt on whether any of my actions were to further my own personal wealth above the success of Litecoin and crypto-currency in general.

The market reacted negatively to the news but only for a short time.  Litecoin under Lee’s direction has been setting itself up as the day-to-day cryptocurrency.  One that is easy to use, cheap, fast and easy to pay with.

But, as a commenter on the Zerohedge article on this event pointed out, quite astutely:

It was requested from Facebook to do it so that he can’t be accused of personal interest, decision bias with regards to the LTC ecosystem development. Facebook is preparing the big announcement that they will introduce support for Litecoin as payment channel.

 

“Digital currency exchange startup Coinbase has announced the appointment of a Facebook executive to its board of directors. In joining the board, David Marcus, vice president of messaging products at Facebook, will bring years of experience in building large-scale mobile products, according to a Coinbase statement posted yesterday.”

The article he quoted is this one from Coindesk. 

And Litecoin, among the major cryptocurrencies, is uniquely positioned to be that currency for Facebook’s digital payment platform as it fills out its road-map into 2018.

It doesn’t hurt Litecoin either that with the start of trading of rival Bitcoin Cash on GDAX and buying through Coinbase that there is now potential insider trading (GASP! NO! REALLY!) around it and that trades may have to be reversed (somehow).

Market manipulation and fraud is going to be a big deal in this space going forward.  The temptation to cash in and scam people is simply too high not to try and game the system to individuals’ advantage.

Lee selling his coins and publicly calling out Satoshi Nakamoto to do the same and end the potential for a whale dumping his stash and bombing the market is another sign that the Litecoin Foundation is looking to go mainstream and take cryptocurrencies out of the ‘hookers, drugs and guns’ market and into the ‘Coke and Starbucks” one.

Creating the Future

In a previous post I talked about the differentiation and segmentation occurring in the crypto-space.  Bitcoin Cash with its big blocks, low fees and quick settlement times is a direct competitor to Litecoin as mediums of exchange.

Litecoin has the added payment processing layer to facilitate point-of-sale convenience while retaining proof-of-work security.

Neither, in my opinion are setting themselves up to be a reserve or foundation asset in the cryptocurrency monetary system.  That’s Bitcoin’s roll.  And as the money flowing into the space begins to see just how inadequate and illiquid Bitcoin is they will move into coins that are both good stores of value and retain their nimbleness and liquidity.

In fact, I expect to see at least a dozen of the current coins on the market rising to the occasion to keep the market liquid and flowing.  Litecoin is just one of them.

But we are so far from that image above, the market in cryptos today is the exact opposite.  Bitcoin sits at the bottom, as a massive, illiquid reserve asset. And it’s value will be converted into other coins that are capable of actually processing payments for services rendered.

In just the past four days since Bitcoin peaked near $20,000 its share of the total cryptocurrency market has plunged from over 67% to around 45% today.

Litecoin, for the first time has broken above 2% as are others, like DASH and Monero.  It’s clear that the cryptocurrency market is undergoing a reorganization of capital during this phase of the bull market.  And I wouldn’t be surprised to see it continue, even if there is a significant correction on the horizon.

Bitcoin Dominatrix Makes $1 Million Pimping Out Clients In "Crypto Slave Farm"

MarketWatch is out with a hard hitting story of a Paris dominatrix who"s been pimping out clients to mine cryptocurrency in a "Crypto Slave Farm" where they deposit the proceeds in a digital wallet.

NEW! JOIN MY CRYPTO SLAVE FARM ??????

Want to serve me financially, but can"t afford exorbitant tributes?https://t.co/AzzqyT1YAq

A first in the industry...#TheManipulatrix #Findom #Cryptodomme pic.twitter.com/b3Lt4lwRgf

— THEODORA (@TheOnlyTheodora) December 11, 2017

The woman who goes by Theodora is a financial dominatrix, which MarketWatch describes below: 

...clients — many of whom never meet her in person — derive sexual pleasure from giving her gifts and money. Exchanges of money can range from several dollars in “tributes,” as they are called, to gifts of more than six figures. Some clients even become a “human ATM,” meaning they give her complete control over a bank account.

Theodora says she makes between $7,000 and $10,000 per month in cryptocurrencies, on top of $10,000 per month she earns making video hypnosis sessions and financial domination videos. Last year she claims she made nearly $1 million from cryptocurrencies alone.

 Theodora

“It’s a form of psychological domination where money is the tool for the transfer of power,” says Theodora, adding “It’s quite common for powerful men like politicians or CEOs to look for a form of sexual release by submitting to a woman — they are in control all the time during the day — and giving up control financially is a more tangible instrument of power for them.”

Theodora has been working as a dominatrix for eight years, and accepting payment in cryptocurrency for four. Her clients, mostly from the U.S. and U.K., are typically men in their late 30s to early 50s - and include a "core group of 20 to 25 regular big spenders who make donations as high as $100,000 at once - some of whom she does "real time" session with in person." She also has a following of 200 to 300 people who make smaller contributions online for $25 / minute video chats. 

MarketWatch sat down with Theodora for a few questions about her adventures in crypto: 

MarketWatch: When did you decide to start taking cryptocurrency?

 

Theodora: In this business of domination, it’s common for dominatrixes to take crypto payments. We cannot take PayPal because they blacklist sex workers. I have been making my clients mine for me for a couple of years.

 

[Mining is the electricity-heavy process of using computer power to verify cryptocurrency transactions — miners are given a monetary prize for their contributions, which Theodora routes to her wallet.]

 

MarketWatch: What is your crypto slave farm?

 

Theodora: It is a little tool where people use the resources of your computer to mine [cryptocurrency] for me from a distance. So even though it might be a tiny amount, I have quite a lot of traffic on my website so it adds up quite nicely.

 

MarketWatch: How do you make money in cryptocurrencies?

 

Theodora: I take donations and also have people mining for me. I take a lot of geek clients who like new technology and they were really excited when I taught them how to build a mining rig for me so they could mine 24/7 from their home.

Theodora says she has her "favorite currencies" she"s betting on, noting "Bitcoin could crash in two days, you don"t know what"s going to happen, so if you have enough to invest in smaller currency you should," and adding "For me, it"s play money." 

Up Over 2000% In 2 Days - Meet The Big-Data, AI, Blockchain, FinTech Mania Stock Of The Year

Update: Well that escalated quickly...

The stock is now up over 500% today and has been halted numerous times...

 

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Having closed last Thursday on its IPO-day at $5.38, news of the acquisition of Ziddu - a blockchain solutions provider (whatever that means in the real world) - LongFin has since exploded to $44.80 in today"s pre-market... up 730% in 2 days.

Remember LongFin? an independent finance and technology company. The Company offers commodity trading, alternate risk transfer, and carry trade financing services. LongFin also provides hedging and risk management solutions to importers, exporters, and small medium business enterprises. LongFin serves customers worldwide.

As iBankCoin notes, it has all of the trimmings of wanton degeneracy on an industrial scale.

• Recent IPO: check


• Small float: check


• Shady as heck: check


• AI company: check

and the cherry on the top...

• a day after coming public, they announce the purchase of a blockchain company: check

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On Thursday Dec 14th, LongFin launched as a FinTech company that helped with FX hedging (and slipped from its post-IPO open price to close lower)

US-based Longfin Corp., a Fintech company providing Finance and foreign exchange hedging solutions to importers and exporters and SMEs, started trading on Nasdaq from today.
According to a statement issued by Longfin, its Low Latency Network is connected to multiple exchanges and banks across the regions to provide the cheapest Forex hedging and low-cost financing to small and medium-size importers and exporters across the globe.
Longfin Founder Venkata S. Meenavalli said, "We are the first Asian Entrepreneur promoted Reg A+ company under JOBS Act, to list its shares directly in Nasdaq and the second Indian entrepreneur promoted company to list directly in the Nasdaq since 2010"

On Friday Dec 15th, they acquired Ziddue and became the future face of Cyrptocurrency awesomeness...

Longfin Corp. (NASDAQ: LFIN), a leading global FinTech company, announces the acquisition of Ziddu.com, a Blockchain-empowered solutions provider that offers Microfinance Lending against Collateralized Warehouse Receipts in the form of Ziddu Coins.

And with all those buzzwords, why wouldn"t it be up 730%!!!!

As a reminder, there are no financials on this company, no reg details on shares outstanding, and no direct evidence of a business model that makes any money?

Regulating Cryptocurrencies... And Why It Matters

Authored by Charles Hugh Smith via OfTwoMinds blog,

Nations that attempt to limit cryptocurrencies" ability to solve these problems will find that protecting high costs and systemic friction will grind their economies into dust.

There"s a great deal of confusion right now about the regulation of cryptocurrencies such as bitcoin. Many observers seem to confuse "regulation" and "banning bitcoin," as if regulation amounts to outlawing bitcoin.

Further confusing things is the regulation of cryptocurrency exchanges, where cryptocurrencies are bought and sold.

In China, for example, cryptocurrencies are not outlawed, but exchanges were shut down until regulators could get a handle on how to deal with the potential for excesses such as fraud, misrepresentation, etc.

A Wild West free-for-all is conducive to scammers, and so some thoughtful regulation that protects users is to be welcomed.

Governments tax income and capital gains. This is how they fund their activities. Clearly, gains reaped from cryptocurrencies are no different from gains reaped from other speculations and investments, so they should be recorded and taxed in the same manner.

Some enthusiasts of cryptocurrencies seem to think that regulations requiring the reporting and taxation of gains made buying and selling cryptocurrencies is tantamount to destroying cryptocurrencies.

I think this view has it backwards: fully legalizing and regulating cryptocurrencies as financial instruments legitimizes them in a much wider circle of potential users, and common-sense regulations are to be encouraged and welcomed, not viewed as threats to cryptocurrencies.

I want to stress that beneath all the speculative frenzy we see in the cryptocurrencies, what will retain value and remain scarce and in demand is whatever solves problems.

Cryptocurrencies have the potential to solve two problems:

1. reducing the cost and friction of financial intermediaries.

2. holding value as the $250 trillion in phantom wealth created in the asset bubbles of the past 12 years vanishes.

These are real problems: financial intermediaries introduce a great amount of friction and cost globally, and even a modest reduction in cost and friction (time, effort, compliance, recording transactions, etc.) would add up very quickly.

The global value of real estate, stocks, bonds and debt-assets such as mortgages and auto loans is around $500 trillion. By my rough estimate, about half of this was created in the past 12 years as central banks inflated enormous bubbles.

A house that was worth $200,000 in 2005 is now worth $500,000, but it provides no additional value as shelter; it is the exact same house with the exact same utility value. So the additional $300,000 of current market value is entirely phantom wealth.

The same can be said of all the other assets whose value has skyrocketed: the underlying assets/collateral haven"t changed enough to justify the current valuations.

Once the bubbles in stocks, bonds, housing, commercial real estate and debt-assets start popping, the owners of all that phantom wealth will be desperate to sell what is dropping in value and convert that wealth into assets that are either holding their value or appreciating.

Virtually all of this newly created financial "wealth" is ephemeral. Bitcoin et al. are routinely criticized as being "worthless" due to their digital/ephemeral nature.

But critics rarely if ever examine the equally ephemeral nature of $250 trillion in financial "wealth."

Bitcoin in particular has two features which may be viewed as having value as all these coordinated bubbles pop:

1. The organization and distribution of bitcoin is mathematical. It is not something that can be changed at the whim of a handful of self-serving people in a room (i.e. central bankers).

2. It is limited in quantity.

Some critics claim this can be changed, but that"s not the way it works. A group of bitcoin miners can propose a new version of bitcoin that will issue a trillion coins, but if nobody supports their new version, it dies.

In other words, the marketplace of users decides what has value and what doesn"t.

Regulations that enable cryptocurrencies to solve the two problems listed above should be welcomed, as these problems are structural and impact everyone in some fashion.

Nations that attempt to limit cryptocurrencies" ability to solve these problems will find that protecting high costs and systemic friction will grind their economies into dust.

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I"m offering my new book Money and Work Unchained at a 10% discount ($8.95 for the Kindle ebook and $18 for the print edition) through December, after which the price goes up to retail ($9.95 and $20). Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Is This The Biggest Blockchain, Big-Data, A.I., FinTech YOLO Trade Of All Time?

Meet LongFin Corp  - an independent finance and technology company. The Company offers commodity trading, alternate risk transfer, and carry trade financing services. LongFin also provides hedging and risk management solutions to importers, exporters, and small medium business enterprises. LongFin serves customers worldwide.

As iBankCoin notes, it has all of the trimmings of wanton degeneracy on an industrial scale.

• Recent IPO: check


• Small float: check


• Shady as heck: check


• AI company: check

and the cherry on the top...

• a day after coming public, they announce the purchase of a blockchain company: check

Longfin Corp.  a leading global FinTech company, announces the acquisition of Ziddu.com, a Blockchain-empowered solutions provider that offers Microfinance Lending against Collateralized Warehouse Receipts in the form of Ziddu Coins.

Ziddu Coin is a smart contract that enables SME’s, processors, manufacturers, importers and exporters using cryptocurrencies across continents. Ziddu Coins are loosely pegged to Ethereum and Bitcoin. The importers/exporters convert offered Ziddu coins into Ethereum or Bitcoin and use the proceeds for their working capital needs. At the end of the contract, importers/exporters will realize their proceeds and pay back their funds through cryptocurrencies only. Depending upon the risk profile of the counterparty, the interest will vary from 12% to 48%.

 

“The advent of Blockchain technology has caught the imagination of the global financial services industry; blockchain is emerging as a technological revolution that is set to disrupt the financial services infrastructure. Cryptocurrencies such as Bitcoin and Ethereum will act as a global financing currency to avail credit against hard currencies of many emerging markets.” Says Venkat Meenavalli, Chairman of Longfin Corp.

And with all those buzzwords, why wouldn"t it be up 200%!!

 

"Calculating the incalculable..." -  An ironic tagline indeed!

The Top 5 Lessons For Trading Anything

Authored by Nicholas Colas via DataTrekResearch,

“How did you feel when you bought that position?”

An odd question, perhaps, but I heard it every week during my first year at SAC Capital in the late 1990s. My inquisitor was Ari Kiev, who was the in-house psychologist there. He met with every trader in the room on a regular basis. For new guys like me, it was the toughest hour of the week.

We’d go down a list of every position I had traded and discuss each one in minute detail. What was my logic? What catalysts did I expect? Who had I spoken to?

But there was one question I hated the most…

“Why didn’t you get bigger?”

That question, in a nutshell, is the essence of trading. You make most of your gains from a handful of names where you owned enough to really generate an outsized return. Put on 20 ideas a week, and 1-2 really work. The trick is to identify those early enough and then buy or short as much as you can stomach. The rest of your ideas usually just net out to zero.

I bring all this up because I have noticed something strange in my conversations about bitcoin with many savvy Wall Street types: they don’t know/remember many old-school rules of trading. Perhaps the last +5 years of low volatility US equity markets have made those skills rusty. Or maybe they think crypto currencies are different from equities – more volatile, different fundamentals, whatever…

Fortunately for this discussion, I have the memory of an old embittered elephant – I remember everything, including plenty of things I should probably forget in order to live a happier life. Bad for me, but good for you. Because I remember those sessions with Ari like they were yesterday.

Here’s what I know about trading anything, from bitcoin to stocks and everything in between:

#1: Respect the trend. No one is bigger than the market. Early is the same thing as wrong. Don’t short new highs or buy new lows. Don’t buy or sell based purely on valuation.

 

Sorry for all the clichés, but they are all 100% correct. Trading means admitting you aren’t the smartest person in the market. Someone always knows more than you, and chances are good they are acting on knowledge you don’t have.

 

This is especially true with crypto currencies. They are – and will continue to be – extremely leaky in terms of information flow. You will never, ever, be the first to know anything.

 

#2: Plan your trade, then trade your plan. One thing I learned at SAC is to document everything I thought was important prior to entering a trade. Catalysts – events like earnings announcements, management presentations, trade shows – were on the list in minute detail. So were macro events that might move the stock, as well as market events like rebalances and options expiration.

 

Case in point: the bitcoin futures set to launch next week. I’ve heard plenty of people say these will be beneficial to bitcoin’s price. And with bitcoin ramping to new highs today, that seems to be right. But will that trend continue once the futures start to trade? That is an entirely different calculus. And I doubt anyone really knows what will happen.

 

#3: Set targets, stops, and time frames and write them all down before you buy your first share. This sounds simple, but the process is extremely helpful. You pair up your expected catalysts with price targets and time frames.

 

Remember the “Why didn’t you get bigger?” question… This is where it makes its appearance. You won’t always know how “right” or “wrong” you are until events start to unfold. But sometimes you really have it right, and that’s when you add to a position instead of just taking profits and moving on. You were right about something, but didn’t see just how powerful your observation was.

 

Writing everything down before you start eliminates some of the selective memory bias we all have, and keeps today’s “You” honest relative to “you” before you entered the trade. Those are two different people, and they need to be able to communicate honestly with each other.

 

#4: Don’t ever turn a trade into an investment. In the words of Bob Dylan, “If something’s not right, it’s wrong.” Even for a small position, if it is a loser you sell it. We’re not managing P&L here; we’re managing your time. Once you sell something you will spend no further time worrying about it. You can make more money – you can’t make more time.

 

#5: Know yourself. Everyone has different risk tolerances, so no two trading styles are exactly the same. Some traders can carry 10 positions and maxed out leverage and happily live with the resultant volatility. Others (myself included), like to limit drawdowns and always have gas in the tank in the form of unused capital.

In the end, that last point should inform all the others. Trading and investing are both manifestations of how we make decisions. That process is a function of our personality, risk tolerance and experience.

So when somebody asks me if they should trade/own bitcoin, my first answer back is “I don’t know… Tell me about yourself.”

The Man Who "Threw Away" Bitcoin Now Has Over 100 Million Reasons To Dig Up Landfill Site

A British man is about to undertake what he calls a "big, expensive project" but he has over 100 million reasons to do so...

James Howells is a British IT worker and was an early Bitcoin ethusiast...

He may also be the most frustrated man in the world currently, but hopefully that"s all about to change.

As The Independent reports, Howells began his fascination with the cryptocurrency in February 2009, and through his computational expertise, he mined 7,500 Bitcoins in the preceding years.

However, there was a woman in Howells" life and, as Gizmodo reports, his girlfriend got fed up with the noise of his block-mining hardware and made him stop. At the time, it was not a big loss he notes, bitcoin was worth next to nothing.

 

"After I had stopped mining, the laptop I had used was broken into parts and sold on eBay. However, I kept the hard drive in a drawer at home knowing it contained my Bitcoin private keys, so that if Bitcoin did become valuable one day I would still have the coins I had mined," he told the Telegraph.

 

Then "in mid-2013 during a clear-out, the hard drive was mistakenly thrown out and put into a general waste bin at my local landfill site, after which it was buried on site."

And so buried deep below thousands of tons of garbage on a Welsh landfill site, lies a hard drive with bitcoins potentially worth more than $100 million.

Four years later and he still - understandably - hasn’t let it go.

He says he’s now considering digging up the landfill in order to find the lost hard drive.

“A modern landfill is a complex engineering project and digging one up brings up all sorts of environmental issues such as dangerous gasses and potential landfill fires,” he said.

 

“It’s a big, expensive and risky project.”

We wish you luck James!

World"s Largest Online Seller Of Gold Is Now Accepting Bitcoin

It"s not quite the non-fiat singularity just yet: for that to happen, one should be able to buy gold with bitcoin, and bitcoin with gold... but thanks to Apmex, the world"s largest online retailer of precious metals, one can now cross out one half of the missing links, because as of yesterday Apmex is now accepting bitcoin.

From the company"s statement:

For more than 15 years, APMEX has been an industry leader and along the way has adapted to the growing needs of our customer base. As bitcoin becomes more popular and widely accepted as payment, we are thrilled to welcome the use of this cryptocurrency for buying Gold, Silver and other Precious Metals by integrating BitPay into our website.

 

With BitPay integration, APMEX customers can now pay using bitcoin and complete their order in seconds. Because bitcoin works like cash for the Internet, customers enjoy a quick process, as the only delay is in the “mining” required of all bitcoin purchases. Additionally, all eligible bitcoin orders will be processed and shipped within one business day of your payment’s clearing and processing with the QuickShip® guarantee (domestic orders only).

 

Buyers can make purchases with bitcoin at any time, from nearly anywhere, just as with most credit cards. International orders become significantly easier as cryptocurrency like bitcoin is accepted worldwide without conversion. Also, many customers prefer Bitcoin payment because of the anonymity offered by a blockchain purchase.

And best of all, there"s an added extra: a 4% discount on your new, shiny yellow metal:

For a limited time, all bitcoin orders are eligible for a 4.0% cash discount, similar to orders paid with check or bank wire. Take advantage of this new payment type and the limited-time introductory pricing offer. Start shopping today!

Oh, and with a whole lot of bitcoin millionaires and billionaires suddenly popping up, guess what countless other struggling online retailers, desperate for the sudden riches of these newly minted, pardon the pun, bitcoinaires will do? Exactly the same, as bitcoin acceptance suddenly becomes the next big thing...

A Golden Opportunity in 2018 Awaits as Distrust in Our Fiat Based System Accelerates

Written by Nathan McDonald, Sprott Money News

Americans prepare to sit down, feast and give thanks this weekend for what they have, who they have and the good blessing that they have enjoyed over the past year.

This comes amidst a time period when their email boxes are being flooded with Black Friday specials for trinkets, bobbles and cosmetic goods that will provide a temporary reprieve from the more realistic situation that the vast majority are experiencing: growing debt levels and increased uncertainty.

The fact is, the stock market continues to tick higher, though not to the benefit of the mass majority of individuals who have simply not been able to partake in the "recovery" after the decimation they experienced via the 2008 crisis - a crisis that I contend has simply been papered over and one that will eventually once again rear its ugly head.

At the same time as new record highs in the stock market, we see that debt levels are also at all time highs, breaking new records and reaffirming my previously mentioned belief that the rot within our system continues to persist, silently behind the scenes. It appears that as a mass, we have learned nothing.

I am not trying to be pessimistic, but the fact is, people are rushing out to buy goods this weekend that they don"t need, can"t afford and ultimately that won"t make them any happier.

The only saving grace is the fact that a growing trend continues to manifest. This trend is one that cannot be ignored at this point and one that has central Banksters privately meeting and discussing what they are going to do about it.

This is the flood of fiat money that continues to flow out of the economy and into what people perceive is a more viable, safe place to park their funds. This can be witnessed via the monumental amount of money that continues to move into bitcoin and other alternative cryptocurrencies. This is a trend that has amazed many as the charts continue to go parabolic.

Perhaps these people are misguided, perhaps they are wrong and bitcoin will crash overnight; perhaps they are correct and we are going through a once in a lifetime change. Who knows - I certainty don"t.

What I do know however is that bitcoin is not alone in this trend. Art, collectibles, and other items that people perceive to have value continue to tick higher, setting new records as they reach new heights. The fact is, people can feel it in their bones - they know something is wrong with the system and they are attempting to park their money in items that cannot be simply printed out of thin air.

Yet, gold and silver continue to stagnate, floundering as money continues to be diverted away from this sector and into cryptocurrencies or whatever the latest, hottest trend is.

Still, I strongly believe that this is not going to last. I have followed the cryptocurrency community long before it was considered mainstream or trendy. The unknown truth is that there is a strong affinity for precious metals within that class of investors. They constantly compare bitcoin to gold and Litecoin to silver. They respect precious metals, dispute whether they believe it is better or worse than their cherished asset.

Any hiccup, any crash, any disturbance within the crypto space that causes this trend to reverse is going to cause a massive amount of funds to move back into the precious metals space, as people take a portion of their phenomenal gains and park it in an asset class that they believe to be a safe space, i.e. gold and silver.

Yet, cryptos do not need to crash for this to happen (although I

believe it would cause greater results) - not at all. People are finicky creatures and even though bitcoin is incredibly divisible, therefore making the current price irrelevant, this is simply not how people think.

Many will begin to believe that they have "missed the boat" or that the price is "simply too high now". This is exactly why stocks split when the nominal price becomes too high.

This leads to a golden scenario. I believe that the potential for gold and silver to sharply increase throughout 2018 is incredibly high. I believe that this will be remembered as a turning point within the precious metals markets and thus one of the greatest opportunities of our modern times.

New Gold-Backed Debit Card Launched In Partnership With MasterCard

In recent years, there has been a major debate about the respective merits of gold versus Bitcoin, even though many, not all, gold bulls are also supporters of the latter. Gold advocates generally view favourably Bitcoin’s inherent characteristics of decentralisation, finite supply and ability to operate (so far) outside of the usual interference by western central banks. Having said that, the launch of Bitcoin futures on the CME in the coming weeks could lead to naked shorting of “paper Bitcoin” by any parties, including central banks and large commercial banks, who deem capping of the Bitcoin price necessary. As we discussed last week in "Financial Times: Sell Bitcoin Because The Market Is About To Become "Civilized", this could align Bitcoin with one of the major issues which has held the gold market hostage for years, time will tell.

While many gold investors remain entrenched in the view that gold will (eventually) prove to be the better store of value, one thing many would acknowledge is that Bitcoin is likely to evolve into a superior means of payment. However, that could be in the process of changing.

A fintech start up is partnering with some financial heavyweights to create a payments system backed by physical – not paper – gold. According to the Financial Times.

The world’s oldest currency is being brought into the digital age with the launch of a debit card and app that will allow people to pay for goods in gold.

 

Fintech group Glint has teamed up with Lloyds Banking Group in the UK and MasterCard to create an app that enables people to load credit in various currencies, which can then be used to buy a portion of a physical gold bar. Customers use the app at the checkout to select whether to pay in a currency or gold, before transacting with their MasterCard.

The development marks the first time people in the UK and overseas can own just a portion of a gold bar through an app, which can then be used in mobile and debit card-based payments. The app also allows people to send gold to peers in the form of a digital payment. Jason Cozens, Glint’s chief executive and co-founder, said: “Everyone is familiar with gold as one of society’s oldest means of exchange, its universal acceptance, its reliability, its history as a store of wealth and as a means of underpinning the value of ‘paper’ currencies. “Unlike paper currencies, gold can’t be wiped out, devalued or corrupted.”

If you’ve been watching carefully Glint (website is glintpay.com) has been working towards this moment for some time. The Crunch reported a capital raising in August this year, noting the impressive list of backers.

Glint, a stealthy London fintech startup that promises a new “global currency,” has raised £3.1 million from a plethora of individual backers in the financial services and asset management space, alongside early-stage investor Bray Capital.

They comprise Haruko Fukuda, former CEO of the World Gold Council and NED of Investec Bank; Oliver Bolitho, formerly Chairman of Goldman Sachs Asset Management Asia; Hugh Sloane, co-founder of asset manager Sloane Robinson; and Lord Flight Of Worcester, formerly of Guinness Flight Global Asset Management.

Other supporters of the new app include the Tokyo Commodity Exchange, and NEC Capital Solutions, a technology integration company. The co-founder and COO of Glint, Ben Davies (right in the photo below), is well known to us for his media appearances - often lambasting manipulation of the gold price – and for running the precious metals investment fund, Hinde Capital. The CEO and co-founder, Jason Cozens, also has gold market experience, having set up “GoldMadeSimple.com, a website that allows investors to buy and store physical gold. Additionally, he set up two ecommerce and online marketing businesses.

In terms of how the service works, the FT reports.

Glint is working with Lloyds in the UK as the deposit holder for customers storing money on their app. When a customer decides to buy gold through the app, this is used to purchase part of a gold bar that is physically allocated in vaults in Switzerland. The app will initially be available in the UK and Europe from Monday before being rolled out in Asia and the US next year.

Mr Davies said the app helps to “democratise” gold by opening access to people who might not be able to afford to buy a whole bar, rather than the commodity being the “preserve of the wealthy”. He added: “The advent of electronic wallets and faster payments through technology means we’re able to use gold in the electronic payment system.

 

“We believe over next few decades people will need the ability to protect their money by owning gold and have the ability to spend it.

We doubt that we’ll have to wait two decades before the vast majority of people will need to protect the value of their money. It could be a matter of months, so Glint’s new service might prove timely. Here are some further thoughts from Davies in the FT article.

Glint’s new service is riding the wave of alternative payments, such as bitcoin, as more people seek payment methods that can store value in a way that differs from traditional currencies. Ben Davies, a co-founder of Glint, said: “We want to create a fairer form of money whereby we give you choice and control over how you protect your money in an era where central banks issue more currency, and so the value of your currency is falling.”

So, is the question gold, Bitcoin or both?
 

Financial Times: Sell Bitcoin Because The Market Is About To Become "Civilized"

On 31 October 2017, we discussed the announcement that the CME Group was responding to client interest and launching a Bitcoin Futures contract before the end of this year. CME stated that the contract would be cash settled based on the CME CF Bitcoin Reference rate, a once-a-day reference rate of the US dollar Bitcoin price at 4.00pm London time. In the run-up to the launch of the futures contract, the Financial Times has written a piece on the likely impact of futures trading on the Bitcoin price.

The title of the piece makes the FT’s view clear, “Prepare to bet against bitcoin as it becomes civilised”. We disagree with using the word “civilised” in this context (see below), but here is the FT’s take. 

In recent years, bitcoin has been the wild west of the financial world. Now, however, it is being civilised — a touch. In the coming weeks, the Chicago Mercantile Exchange plans to start listing bitcoin futures, with a centralised clearing mechanism. Cboe Global Markets may follow suit. That will enable investors to bet on the coin’s future value without actually holding it — just as investors can use the Chicago exchange to bet on hog prices, say, without ever handling a pig.

To its credit, the FT reflects the concerns from some CME participants that there is insufficient regulatory oversight and Bitcoin’s stratospheric vol could lead to significant losses for some traders.

Is this a good idea? Some of the CME’s members do not think so. This week Interactive Brokers, an important clearing firm in the exchange, took the extraordinary step of using a newspaper advertisement to ask for more regulatory oversight. It fears that bitcoin is potentially so volatile that these futures will create huge losses for traders, which might then undermine the health of the CME and hurt other brokers, given its part-mutualised structure. The CME — unsurprisingly — dismisses this as poppycock: it argues that any risks will be contained by rules that allow traders to charge more so as to generate fat margins (of about 30 per cent) and thus absorb losses, and by circuit breakers that would stop a trade in the event of wild price swings.

Our suspicion is that CME Group has seen the volume of Bitcoin trading and is determined to get its “cut”, whether or not some of its members take some big hits or not. It can deal with those issues if or when they occur. Anyway, the FT moves on to the more interesting subject of the impact on Bitcoin’s price. We should note that when the futures contract was announced the price surged more than $100 to a then all-time high of $645.

But while the regulatory debate bubbles on, there is a more immediate question facing investors: bitcoin prices. Until now, it has been an article of faith among bitcoin evangelists that if — or when — the currency became more “civilised”, this will boost the price. After all, the argument goes, assimilating bitcoin into the mainstream investment world should boost its appeal and demand, making it more valuable.

As the FT alludes to in the articles title, it expects the Bitcoin price to fall.

It is highly likely there will be an opposite effect. Until now, investors have not had an easy way to bet against bitcoin — the only “short” was to sell coins. But the CME futures contract will let investors place those negative bets. You do not need to be a conspiracy theorist to imagine that some bitcoin cynics will be doing just that.

To support its case, the FT cites the example of Japan launching equity derivatives in 1989, just before the bubble burst.

Think, for example, about Japan. Before the mid-1980s, its stock market seemed to exist on a planet of its own, subject to its own valuation rules. But when Japanese equity derivative contracts were launched, and then integrated within the wider global market system as a result of financial reform, that sense of “otherness” broke down. The change in how Japan was seen through a comparative investment lens was not the only reason for the 1990 Nikkei crash, but it contributed.

We have a slight problem with using this as an analogy for Bitcoin. Firstly, an ultra-hawkish BOJ-governor was nominated in mid-1989 who announced his intention to crackdown on house price inflation and the shadow banking system which was facilitating much of the leverage. Secondly, all bubbles burst and Japan’s was extreme. For example, depending on whether you use the highest per square metre property deal in the Ginza district, or one in the Chiyoda district, the land underneath the Imperial Palace was valued between $852 billion and $5.1 trillion at the time. Futures trading, we would suggest, played a tiny role.

The FT cites the launch of trading in the ABX Index prior to the sub-prime crisis, as another example.

So too with US mortgages. Until 2005 or so, outsiders could not easily assess or price the risks of America’s subprime mortgages: mortgage-backed bond prices were opaque, and the only way to short the market was to sell bonds. But when mortgage derivatives, such as the ABX index, were launched, it suddenly became easy to make negative bets. Then, the ABX index was published in newspapers, such as the Financial Times, in 2007, creating a visible barometer of sentiment. That helped a sense of panic to feed on itself after 2008.

Once again, we would suggest the FT is confusing the impact of derivatives with an inevitable reversion of market price of an asset in a bubble as expectations regarding the outlook changed. In the case of sub-prime, housing prices in the US had never fallen, then they did, the AAA-ratings of the bonds were manifestly incorrect and the dramatically overpriced sub-prime bonds were pledged as collateral in all manner of other risky, leveraged trades.

From our perspective, the impact of the futures launch is difficult to gauge as it depends on the interaction of two opposing forces.

Firstly, as cryptocurrencies gradually become accepted as an asset class, more institutional money is likely to enter the sector and holding long futures positions is one way to do it.

 

Secondly, as the article notes, Bitcoin futures will be settled in cash, which means there is potential for the volume of futures trading to vastly outweigh the buying and selling of “actual” Bitcoins. If this occurs, then the “tail can wag the dog” as price discovery is dominated by futures trading. This permits all manner of market abuse via naked short selling by investors, major banks and any “official” players who deem it necessary to manipulate the Bitcoin price.

For this reason, we don’t agree that adding a futures contract will necessarily “civilise” Bitcoin, indeed, it might have the opposite effect.

The second scenario precisely describes the state of the “gold” market today. According to the Reserve Bank of India’s estimate, the ratio of “paper gold” trading to physical gold trading is 92:1, meaning that the price of gold on the screens has almost nothing to do with the buying and selling of physical gold. This makes the gold market and, therefore, the gold price something of a mockery. As Zero Hedge has highlighted time after time, the gold price has frequently been subject to waterfall declines, as huge volumes of gold futures are dumped on the market with no regard for price. See "Gold Slammed After Someone Pukes $4bn Notional In Gold Futures" on 10 November 2017. Perhaps the FT journalist, Gillian Tett, could write an article on gold, instead of Bitcoin, explaining how the price of the former – a widely viewed indicator of financial risk – is being suppressed by derivative trading. Indeed, Tett was present at a private dinner in Scott’s of Mayfair several years ago when the Gold Anti-Trust Action Committee gave a presentation on exactly the same process which she expects to lower the Bitcoin price.

Mysterious Bitcoin Dip-Buyer Identified

Amid the cataclymsic collapse of Bitcoin late on Friday night, the crypto currency suddenly saw a large buyer step in as prices plummeted below $6000. We now have an idea who that buyer of last resort was...

As a result of a giant publicity effort from its proponents, BCH saw mass investment as it heads towards a potentially contentious hard fork set for just after 7 p.m. GMT today. The failure of SegWit2x, coupled with endorsement from the soon-to-be-defunct Bitcoin Classic team meant BCH became the major ‘competitor’ to Bitcoin over the weekend.

But, as Reuters reports, former Fortress macro hedge fund manager Mike Novogratz - who we most recently profiled here - told Reuters Global 2018 Investment Outlook Summit in New York that he bought $15 to $20 million worth of Bitcoin over the weekend in that recent pullback.

The billionaire says his crypto fund "Galaxy Investment Partners" owns Bitcoin, Ethereum, and many other companies, and coins.

“The institutionalization of this space is coming. It’s coming pretty quick,” he said.

Novogratz said he expects major financial firms will soon start to offer bitcoin or similar products as an investment option, one that could be easily purchased over the phone.

“When it’s that easy, the price of bitcoin or ethereum is going to go much higher. And that is a lot closer than people think,”

His biggest regret this year has been not buying more cryptocurrencies when prices fell, because he knew that they would keep going up. He sees bitcoin, for instance, hitting $10,000 by March.

Novogratz previously said that, while bitcoin is a bubble, the mania is justified, because it is a technological advancement that promises to fundamentally alter our lives.

"I can hear the herd coming" Novogratz said.

And bubble or not, Novogratz concluded eloquently on the extreme nature of cryptocurrencies" potential...

“Remember, bubbles happen around things that fundamentally change the way we live,” he said.

 

“The railroad bubble. Railroads really fundamentally changed the way we lived. The internet bubble changed the way we live. When I look forward five, 10 years, the possibilities really get your animal spirits going.”

Bitcoin is set to become "the biggest bubble of our time," he added, and could reach $10,000 very soon due to fast-building interest.

But, we also note that Bank of Japan Governor Kuroda made some fascinating comments earlier that appeared to suggest selling yen and buying bitcoin:

Haruhiko Kuroda says he doesn’t “see any serious problem arriving from cryptocurrencies at the moment.”

 

“We are carefully watching the development,” he says at an event of the Schweizerisches Institut für Auslandforschung on Monday in Zurich.

 

Additionally, Bloomberg reported that Kurodas warned "Japan"s high debt-to-GDP ratio is not sustainable."

And as the chart below shows, the buying binge overnight really struck as Japan opened...

This move comes on the heels of American venture capital investor Tim Draper"s comments (founder of the Silicon Valley VC firm Draper Fisher Jurvetson) that fiat currencies will no longer be in use in five year"s time as they are to be replaced by cryptocurrencies.

At the WebSummit conference in Lisbon, Portugal, he told Forbes the fiat system will eventually disappear as people look toward coins like bitcoin or ethereum. He says its because fiat currencies are bound by country borders.

 

“In five years, if you try to use fiat currency they will laugh at you. Bitcoin and other cryptocurrencies will be so relevant … there will be no reason to have the fiat currencies,” he said.

 

An unabashed promoter of cryptocurrencies, Draper said he fell in love with bitcoin not long after it was introduced in 2009. He bought 30,000 coins in 2014 (at about $600 each); they are now valued at over $214 million.

 

“This is the greatest technology since the internet,’’ said the investor. “This is a sociological transformation, it’s a movement.’’

 

He also said that bitcoin will divide the financial services industry, at least initially.

 

“There will be a few who embrace it and jump out front and say, ‘This is important’ and then there are going to be those who jump back and say, ‘I’m going to cling to the past, and I’m going to hold onto everything I’ve got.’ And you know who wins then,” Draper said. “It’s always progress, it’s always technology.’’

 

Talking at the conference, he said investors should thoroughly study who’s running the ICOs and whether their business plans seem legitimate.

 

Draper has rejected the possibility of the cryptocurrency market imploding like the dotcom boom in the late ‘90s, saying “people are always going to say there’s a problem, and that usually means there’s a lot more upside.”

Finally we leave you with Dennis Gartman"s comments tonight on bitcoin:

"this is a market for criminals and millennials."

One River"s CIO: "Not Since The Housing Bubble Has Society Succumbed To Such Financial Hysteria"

Following the first excerpt from the latest weekend note by One River"s prolific CIO, Eric Peters, in which the hedge fund manager discusses the outer limits of speculation, and why there is no such thing as "this time will be different" in markets, he also had some notable observations on why of all the asset bubbles currently abounding, that of bitcoin may be the most informative about human nature...

Anecdote

 

“Bitcoin is important,” said Lithium, handsfree on Highway One. “It reminds people that supply scarcity, capital flows, and imagination, matter more than anything.”

 

Bitcoin printed another 20% weekly range. “Risk tolerance is the market’s most important fundamental,” said Lithium, racing through Malibu, SoCal’s sun streaming, steaming, “It’s also the most mysterious of all market drivers.”

 

Like every form of intangible money, Bitcoin is an illusion, that derives value through our collective acceptance of its worth. And if that sounds circular, it is. Anyhow, Bitcoin’s value fluctuates like any other currency,  just more wildly. That’s because people hold vastly different opinions as to its worth; ranging from zero to near infinity.

 

What these opinions have in common is that they’re each the product of an active imagination.   “Bitcoin’s ascent reminds people of all the money they’re not making.”

 

Not since the housing bubble has society succumbed to mass financial hysteria. Before that had been dotcom fever, which followed the Asian Tigers, and so on, infinitum. But in recent years, we’ve succumbed to incrementalism.

 

As interest rates collapsed to zero, each basis point took on greater significance. Central banks moved in ever decreasing increments. They printed money on pre-defined schedules. Balance sheet reduction is now formulaic. Drip, drip, drip. As interest rate expectations rise or fall 10bps, global asset prices ebb and flow, slavishly, one tethered to the other.

 

Imagination remains absent, unlike 1999, when people used credit card cash advances to buy fairy tales. In 2007 they bought castles on credit, scoffing at each 25bp rate hike - until they didn’t. That’s how these things end.

 

“Bitcoin is igniting imaginations. Unleashing speculative spirits. And for money managers, the only defense against a bubble is to buy it. Which is exceedingly difficult, because this kind of story ends like 1987.”

A Look Inside The Secret Swiss Bunker Where The Ultra Rich Hide Their Bitcoins

Somewhere in the mountains near Switzerland’s Lake Lucerne lies a hidden underground vault containing a vast fortune.

It’s no ordinary vault, according to Quartz. Built inside a decommissioned Swiss military bunker dug into a granite mountain, it’s precise location is a closely guarded secret, and access is limited by myriad security precautions.

But instead of gold bars, the bunker contains hard drives on which customers’ bitcoins are being kept in what’s call “cold storage” – i.e. the owners’ private keys are protected by an air-gapped hard drive. The vault is one of many operated by Xapo, an early bitcoin company known for its cold storage wallet products and a debit card that pays for transactions in digital currencies.

The company won’t disclose how much bitcoin is stored in the vault, but one employee who spoke with Quartz said he sometimes takes customers with millions of dollars in bitcoin on tours of the vaults where their fortune is stored. Xapo was founded by Argentinian entrepreneur and current CEO Wences Casares, whom Quartz describes as “patient zero” of bitcoin among Silicon Valley’s elite. Cesares reportedly gave Bill Gates and Reed Hoffman their first bitcoins.

As Quartz explains, the bitcoin vault doesn’t store actual bitcoin units. Instead, what’s being stored are the owners’ private cryptographic keys that allow the owner to access and transfer his or her bitcoins by matching the key with a public key that’s used to identify the coin on the blockchain. Gaining unauthorized access to someone’s private keys is akin to making off with a gold bar.

The inexorable rise in bitcoin’s valuation has been marred by notable hacking incidents like the collapse of Mt. Gox, which ushered in the longest bear market in bitcoin’s history. Security fears appear to have subsided as bitcoin’s price has soared to all-time highs, but incidents like the collapse of the DAO have inspired investors with substantial bitcoin wealth to look into protecting it.

To store the coins, Xapos contracts Deltalis, the company that technically operates the 10,000-square-foot data-center that now inhabits the decommissioned bunker.

Server racks for banks, and any client who needs secure data processing, fill a cavity dug over 320 meters deep in the granite mountain. The Swiss military built the facility in 1947, and it served as the army’s secret headquarters during the Cold War, Agence-France Presse has reported. Inside, walls covered with detailed maps and ancient radio electronics serve as vestiges of its military past.

To enter Xapo’s private vault in the Deltalis data center, visitors must endure an exhausting series of security procedures.

Streiff leads us to a concrete facade jutting out of the mountainside, the bunker’s entrance. We step through about a foot of concrete and enter the lobby. I sign in as I would at any office building, except I also have to present my fingerprints and be photographed. After that I step through a “man-trap”—a phone booth-sized cylinder made of bullet-proof glass that shuts me in until an operator opens the door on the opposite side.

Once through the man-trap, we touch our ID cards and pass through a set of steel revolving doors, then walk down a 100-meter long passageway through the granite. At the end of the passageway are two red steel doors that I’m told can survive a nuclear blast. Streiff invites me to try to close one—my 90 kg (198 pound) frame can’t budge it. “They’re closed every night,” he tells me, showing me how to hang off the handle and use his body’s momentum to gradually swing it shut.

Streiff and Kon are taking me to see Xapo’s “private suite,” an ultra-secure, customized, portion of the data center. We pass through a second man-trap and then end up in front of a nondescript white door. “This is further than anyone outside Xapo has been,” Streiff tells me, as he unlocks it. Inside is a space about the size of a walk-in closet containing a cooling unit, and yet another door. But that’s as far as they’ll let me go, and I’m not allowed to take photographs.

Security is similarly tight inside the vault. Nobody is allowed the enter the “cold room” where the bitcoins are stored on air-gapped hard drives. To protect against an electromagnetic pulse attack, the cold room is equipped with a Faraday cage, a type of barrier meant to block electromagnetic fields.

Beyond that door, I rely on what Carlos Rienzi, Xapo’s head of security, tells me later, when I’m back in London. Rienzi chose the vault for Xapo, and he designed the private suite and its security protocols. His “threat model,” as computer security jargon goes, is to protect against attacks from “well-funded terrorist groups or hackers.”

There are two more portals inside the suite: the first leads to an operators’ room, and the second to a “cold room.” The cold room is encircled with steel slabs to form a Faraday cage: a barrier that protects against a possible electromagnetic pulse (EMP) attack that could wipe out the data—and thus the keys to the bitcoin—stored in the room. For digital assets like bitcoin, thick walls and a secret location are not enough. A shield against invisible modes of attack like an EMP bomb must be provided for.

No one, not even the operator, enters the cold room. Its door is sealed with tape—like a crime scene—to ensure it’s not tampered with. The cold room contains hardware, which is never connected to the internet, used to sign bitcoin transactions. Signing a transaction can be performed offline. The operator accesses that hardware using “special cabling,” sending encrypted data to the hardware for signing. Finally, before a transaction can be approved, two more sign-offs, in two other vaults located on separate continents, must be performed.

I ask Rienzi if he feels pretty confident about the security measures he has in place in Switzerland. “We are under attack 24/7,” he tells me, referring to the terrorists and hackers he designed the vault to guard against. “This is not a race. It is a chess game. You have to think about the opponent’s next movement. You can never relax.”

Of course, all the security measures in the world can’t protect investors from a sudden plunge in the bitcoin price. However, the digital currency’s indomitable - for now - performance has silenced at least one of its most prominent critics. Then said, unlike precious metal specie, one carefully targeted EMP would be all it takes to sever the ownership chain for a long, long time.

Still, with the digital currency recently reaching yet another record high, despite relentless jawboning and rhetoric by everyone from Jamie Dimon to central bankers to China, we can only imagine the business of protecting bitcoin fortunes is set to boom.